R-I board approves sale of $2.5 million General Obligation Bonds

By Laura Schiermeier, Staff Writer
Posted 6/24/20

VIENNA —At the June 15 reorganization meeting of the Maries County R-I School Board, a parameters resolution was approved that designated a final terms committee consisting of Superintendent …

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R-I board approves sale of $2.5 million General Obligation Bonds

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VIENNA —At the June 15 reorganization meeting of the Maries County R-I School Board, a parameters resolution was approved that designated a final terms committee consisting of Superintendent Mark Parker, Board President Vicki Bade, and Larry J. Hart, Chief Executive Officer of L.J. Hart & Company.

The resolution authorized the sale of $2,500,000 General Obligation Bond Issue to its Municipal Bond Underwriter, L.J. Hart & Company of St. Louis. 

“We appreciate the strong vote of confidence we received from local patrons at the election and want to lock in interest rates that are highly favorable,” Bade said. These new money General Obligation Bonds were approved by about 84% of the voters at the June 2, 2020 election, for the purpose of providing funds to implement safety and security measures district-wide including entrance vestibules, doors and windows, to construct a gymnasium entrance/lobby and concession stand, to repurpose existing spaces for the band and weight room, and to make improvements to the parking lots and track.

The bond marketing process provided the first opportunity to invest to local financial institutions and according to L.J. Hart & Company the following local banks agreed to purchase the entire issue: the Town and Country Bank ($450,000) and the Maries County Bank ($2,025,000). Some individuals also purchased bonds from this offering. This strong local support was very helpful to the success of the financing. “It is nice that our marketing procedures facilitated this local involvement while still receiving attractive interest rates,” commented Superintendent Parker.

The Board of Education selected the negotiated sale of the bonds in order to capture current market conditions, to be certain that local banks received an opportunity to purchase the bonds, and because the proposed interest rates were fair based upon current conditions in the municipal bond market. Parker said the district did compare proposed interest rates with the national bond indexes and other Missouri issues with a similar rating quality sold at negotiated sales to be certain that rates for the district’s bonds were favorable. “Based upon pricing of these other financings, and the national indexes for AA rated General Obligation Bonds, our rates were as good as or better than some other sales for a similar quality level of bond issue,” Parker said.

The information shared by L. J. Hart & Company indicated the bonds are scheduled to mature on March 1, 2029 through March 1, 2040 with re-offered yields ranging from 0.90% to 1.40% and the total interest expense coming in consistent with the original projections. The district is selling all of the bonds at a premium to the March 1, 2025 call date in order to produce additional funds for the projects in the amount of $366,846.60, which is an increase of $50,768.85 from what was presented at the June 15, 2020 Board of Education meeting. The interest income from the bonds is exempt from federal and state of Missouri income taxes and the bonds were available in $5,000 denominations. 

These bonds carry a “AA+” rating from S&P Global due to the district’s participation in the Missouri Direct Deposit Program coordinated through the Missouri Health and Educational Facilities Authority. 

The bonds do contain optional redemption (call) provisions on March 1, 2025 at no penalty that will facilitate the reduction of future interest expense in the event of prepayment or a future refunding to lower rates if market conditions make it economically feasible. The financing proceeds are expected to be available to the District by July 13, 2020 and will be promptly reinvested by the district to earn additional interest for use in the completion of the projects. The legal documents to complete the issuance of the bonds were prepared by Lori Lea Shelley, Esq. of Mickes O’Toole, LLC in its role as bond counsel for the District.

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